Watergate Wrangling

Last fall, Monument was back. It struck a new agreement with Blackstone for an undisclosed price. Darby said Lehman Brothers is a major investor in the deal, which is supposed to close in August.

The D.C. Zoning Commission gave tentative approval to the conversion on May 10. It is expected to vote on final approval next Monday. New luxury co-op units would range in price from $700,000 for a studio to $2.5 million for a penthouse with views of the Potomac River.

There is, however, a glitch.

Space under the hotel -- 46,000 square feet now used for parking, meeting rooms and administrative offices -- is owned by Watergate East, the co-op building closest to the hotel. The co-op agreed in 1990 to lease that space to the hotel's owner for $12 a year for 75 years.

Because they own that space under the hotel, opponents of the conversion believe they can stop it. Darby has tried to buy it; he would like to use it to expand the parking garage so he can offer buyers of his fancy new co-ops two parking spaces per unit. He also wants to avoid Watergate East co-op approval for any other renovation he wants to make to the parking garage.

Monument offered Watergate East $4.25 million for the underground space.

Those who support the sale say the proceeds could be an important buffer against increases in co-op fees. Daniel F. Sheehan, the president of the Watergate East co-op board of directors, supports the sale. "A sale of this magnitude would guard against future increases of fees to the members," said Sheehan, who is retired from the U.S. Coast Guard and works as a consultant.

Opponents are holding firm. They say selling the space would speed the closing of the hotel.

"If you take the hotel, it will make the place dormant," said William S. Diedrich a retired U.S. diplomat. "It's a decent place to go [and] have a $15 hamburger," he said of the bar lounge.

"There's no living like the Watergate living and you need the hotel here," said Evelyn Y. Davis, an investor activist who has lived at the complex for two decades and opposes the sale. "It's part of the Watergate mystique."